In the course of a recent "pitch" conference call with a prominent VC firm (specializing in BRIC wireless telecom initiatives), the VC said "We need to get more up to speed on the technology, so we'd like to see how it plays out and perhaps visit on the second round"
So that means:
We were talking to a low-level analyst that presented himself as a decision maker. Any VC worth their salt that puts themselves out to investors as specializing in a niche---necessarily implies they are up to speed--and their investors can expect deployment of capital quickly, at early stage companies--so that investors can expect better returns than they might get at another VC firm, or a maybe a private equity firm.
The only way to get an education is to participate or watch. Those that participate share in the glory of the gold medal. In this case, real gold. Those that watch to learn, get a bronze medal. They come in 3 places behind the big winner.
In the world of investing, the first round participants are paying for the first look, and a front row seat. Their returns (on winners) can be 500x initial capital. Can you spell GOOGLE?. OK, there aren't many GOOG's in the course of a decade---but the point is---the second round investor in a company that's proven itself, is passing hurdles without a blink, is going to pay 5x, or maybe 10x the valuation. And is ideally going to earn 4x-5x over the next 10 years.
Or the company is on such a trajectory that they can get bank financing for their next $50 million round.
VC's--or any other "professional investor" that says 'we need to be better educated, and watch the market mature" shouldn't be claiming to be experts.
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